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AKIPRESS.COM - Mongolia's legislature removed the main obstacle to an International Monetary Fund-led bailout for its crisis-ridden economy by annulling a controversial banking requirement for foreign-invested projects, state news agency Montsame said Friday.
The IMF board had been expected to approve a $5.5 billion rescue package for Mongolia at a meeting on April 28, but delayed a decision amid concerns about a clause that required foreign projects such as Rio Tinto's Oyu Tolgoi copper mine to channel sales revenues through local banks in order to boost Mongolia's foreign exchange reserves.
Heavy foreign debt, a collapse in its tugrik currency and a slowdown in growth in its biggest trading partner, China, have combined to push the economy into crisis.
A member of the budget standing committee, Ch. Khurelbaatar, said there was no time to waste in receiving the IMF program, according to a summary of a Thursday meeting posted on the Mongolian parliament's official website.
Analysts said the banking requirement had been a major sticking point for Rio Tinto and investors that lent $5.4 billion to finance the expansion of the Oyu Tolgoi mine.
The expansion was already put on hold for two years because of a dispute over taxes and repeated attempts by lawmakers to change a landmark investment agreement signed in 2009 that granted the Mongolian government a 34 percent stake in the mine.
Nick Cousyn, chief operating officer of Ulaanbaatar-based brokerage BDSec, said the clause "could have easily resulted in another work stoppage for underground construction".